Kontio’s journey: 5 steps to a lean production

May 20, 2021

Kontio, the world’s largest log home manufacturer, was struggling with a high seasonal fluctuation of demand. The inability to simulate and control inventory levels led to excessive emergency stocks, high amounts of capital tied to inventories, and delays in lead times. At the same time, Kontio was committed to maintaining a high level of service, but this ambition required a new level of agility to adapt to different scenarios. For that reason, they partnered with Nortal to modernize their production planning and take a huge step toward the lean philosophy.

Finland’s Kontiotuote Oy, or Kontio, is the world’s largest log house manufacturer measured in both sales and production. When a company reaches 50 million euros in turnover, it begins to find that its growth is limited by its ability to plan and deliver production.

Spreadsheet-planned production is a very common way of working among manufacturing companies and in may cases companies have mastered this approach to the level of efficency to stretches, however Excel has still many limitations. Specifically, it requires to make adjustments manuallh in production scheduling, constantly modifying the plan according to changes in sales, inventory, production actuals or market conditions. It offers no true overall picture of production capability, resulting in disconnected material flow throughout the factory. This causes excess work in process inventory and extended production lead times. Plus, people in production are highly likely to be stressed and dissatisfied with the constant firefighting due to the unbalanced material flow.

For a growth-oriented company it allows to grow only so far. To keep growing and at the same time raise efficiency and maintain a high level of service and keeping up with strict delivery times requires a new approach both in terms of tools as well as in the planning and philosophy.

The solution is a mix of lean philosophy and rule-based factory planning, covering the entire value chain from planning and production to business. When handled with precision the result will be a holistic planning process and visual management that interconnects the entire production and planning data to observe, control and plan the factory work from a bird’s-eye-view. Thus, it improves productivity, reduces the raw material inventory, eliminates finished goods inventory and secures on-time delivery.

If you want to learn more about the steps to reach such level of production, read more from the Kontio’s case.